Those working in the agricultural sector, cattle breeding, fishing industry, and forestry have a tax-free status. The governmental authorities of autonomous communities, scientific and research centers that receive their funds from the budget, Red Cross departments, and associations for the disabled are also exempt from paying this tax.
It should be mentioned that not all individual entrepreneurs are required to pay the IAE tax. Only individual entrepreneurs who establish property societies (Comunidades de Bienes – C.B.) or civil societies (Sociedades Civiles – S.C.) are responsible for paying the Spanish IAE tax.
The Spanish IAE tax is a mandatory, directly proportional tax payable to the budget once a year. In contrast to other taxes, the amount payable for the IAE does not depend upon the active balance.
Benefits effective for Spanish IAE tax
Currently the following benefits are effective for the Spanish IAE tax:
- Both legal entities and individual entrepreneurs are exempt from this tax payment within the first two years of their business activity.
- From year three onwards, only companies and individual entrepreneurs whose annual invoice revenues exceed 1 million euros are obliged to pay this tax.
Therefore, in the beginning of their activities, companies of small and medium business size (PYMES) are registered with the Spanish fiscal authorities as IAE taxpayers. However, due to their relatively small cash turnovers, they never actually pay this tax.
Spanish IAE tax fees vary depending on the type of economic activities conducted, the size of the commercial buildings, municipality size (as determined by the number of registered residents), employees, and other characteristics established at the local level. As a rule, the sum of the tax constitutes 200 to 4,000 euros per year for a company whose revenues exceed the tax-exempt minimum.
INEEDSpain company will gladly provide you with a consultation on any issues related to the fiscal system in Spain. In the short term, our specialists will grant you an oral or written consultation on any taxes that pertain to your interests.